Do Annuities Help Plan for a Retirement Income
Are Annuities Good For Providing Retirement Income?
Annuity products come from major life insurance companies. They are a mix of investment and insurance, but are mostly considered when a person wants to build some cash for a long term goal, or to provide a monthly payment. Lots of people think about retirement when they consider these products, but some consider them for other savings goals.
There are two main types of way to build up the cash value, so something can start generating income for retirement.
Immediate Annuities accept a lump sum. This money usually comes from a distribution a person gets at retirement, but it could come from other sources too. After being approved and funded, the product starts generating periodic payments right away.
Deferred annuities do not pay out right away. In fact, the owner may have to pay a penalty if he or she takes out cash before the term that is specified in the contract. There may be exceptions for this in the case of a severe illness, etc. Some may be funded with a large payment, or they may accept cash contributions made over a period of years. These are intended for people who are trying to plan for an event that is some time in the future.
How do annuity payouts work? By now you probably realize that you are investing your cash in order to be able to withdraw cash back. Some annuities may be guaranteed to pay for life, while some may only pay for 10 years. The option that you choose will depend upon your own assets, needs, and individual circumstances.
You can also find annuities with flexible options, so that the owner does not need to take payments. Some people use this to set aside an emergency fund or leave money for their heirs.
One big advantage of buiding cash this way is favorable tax treatment. Both gains and compouding are free to go without being taxed. Income may or may not be taxed depending upon the qualified or non-qualified tax status of the contract.
Another advantage is the safety of fixed products. Fixed products may pay at a contract rate, or they may be pegged to a market index.
Consider one common market like the S&P 500. In good years, when the index goes up, the cash account will grow at a rate that is pegged to that market index. In down years, when the index is down, the cash account will be guaranteed not to lose money. It may either be set to remain stable, or even to earn a set rate like 2%.
And the last question that most people have is jsut how long they will get paid, and how much money they will get. Of course, this all depends on how the account was funded, the return rates, market conditions, and the type of annuity. You need to get some help to look at different products to see how an annuity can help you reach your financial dreams and goals. - 23210
Annuity products come from major life insurance companies. They are a mix of investment and insurance, but are mostly considered when a person wants to build some cash for a long term goal, or to provide a monthly payment. Lots of people think about retirement when they consider these products, but some consider them for other savings goals.
There are two main types of way to build up the cash value, so something can start generating income for retirement.
Immediate Annuities accept a lump sum. This money usually comes from a distribution a person gets at retirement, but it could come from other sources too. After being approved and funded, the product starts generating periodic payments right away.
Deferred annuities do not pay out right away. In fact, the owner may have to pay a penalty if he or she takes out cash before the term that is specified in the contract. There may be exceptions for this in the case of a severe illness, etc. Some may be funded with a large payment, or they may accept cash contributions made over a period of years. These are intended for people who are trying to plan for an event that is some time in the future.
How do annuity payouts work? By now you probably realize that you are investing your cash in order to be able to withdraw cash back. Some annuities may be guaranteed to pay for life, while some may only pay for 10 years. The option that you choose will depend upon your own assets, needs, and individual circumstances.
You can also find annuities with flexible options, so that the owner does not need to take payments. Some people use this to set aside an emergency fund or leave money for their heirs.
One big advantage of buiding cash this way is favorable tax treatment. Both gains and compouding are free to go without being taxed. Income may or may not be taxed depending upon the qualified or non-qualified tax status of the contract.
Another advantage is the safety of fixed products. Fixed products may pay at a contract rate, or they may be pegged to a market index.
Consider one common market like the S&P 500. In good years, when the index goes up, the cash account will grow at a rate that is pegged to that market index. In down years, when the index is down, the cash account will be guaranteed not to lose money. It may either be set to remain stable, or even to earn a set rate like 2%.
And the last question that most people have is jsut how long they will get paid, and how much money they will get. Of course, this all depends on how the account was funded, the return rates, market conditions, and the type of annuity. You need to get some help to look at different products to see how an annuity can help you reach your financial dreams and goals. - 23210
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posted by X - Men @ 4:07 AM
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